What are some of the reasons to do a life settlement?
Personal Reasons:
- Divorce
- Fund retirement
- Debt reduction
- Eliminate insurance premiums
- Buy long term care insurance
- Charitable contributions
- Use proceeds for other investments
- Medical Expenses
- Bankruptcy - liquidation of assets
- Over insured
- Bridge periods of lost income
- Pay for new home or dream vacation
- Purchase long term care services
- Higher quality of life
Estate Planning:
- Insured outlives heirs
- Change in estate size means current policy not appropriate
- Proceeds from life settlement used to buy new paid up policy
- Changes in estate tax laws no longer necessitate policy
- Pay gift taxes on current transfer of estate
- Create financial planning flexibility from dormant asset
- Current policy is underperforming
Business & Professional:
- Business sale
- Buy/sell agreement dissolved
- Policy performance is below expectation
- Executive leaving
- A "key man" policy is no longer needed or required for loan
- Deferred compensation payout requires policy liquidation
